What are the Advantages and Disadvantages of Getting a Cosigner?

Nov 19, 2020

Close up of a loan application form with a pen

Cosigning Pros and Cons for Car Loans

For many borrowers, cosigning is a fantastic option tornconsider. However, it also presents some dangers and risks. So, what are thernadvantages and disadvantages of getting a cosigner? Here, we will explore thernpros and cons for cosigning a car loan.

Couple shaking hands with a car salesman

Benefits of Cosigning

Makes getting accepted for a loan much easier asrnthere are two people signing the contract.
Can potentially get a lower interest rate.
Gives the borrowers a chance to improve theirrncredit score.

Risks of Cosigning

Credit is at stake for both cosigners.
If one person fails to pay, the other signer isrnpressured to pay the other person’s part to protect both of their credit scores.
Relationships can be tarnished if one of therncosigners aren’t responsible with their payments.
If one cosigner is regularly taking advantage ofrnthe other, the other person cannot back out of the contract. Legally, they arernbound until the loan is fully paid.

Remember that cosigning is not for everyone and it requiresrna serious conversation with the other potential cosigner. There should be fullrntrust between both parties before moving forward. For instance, cosigning is arngreat option if a parent is trying to help their son or daughter. This may notrnbe recommended among two friends.

Need more advice on financing for a car loan? Check out the OkCarz blog for more tips.rnWant to speak with one of our expert financial representatives? Contact our team through our website orrnover the phone and we will be happy to schedule a meeting with you.